Companies that file with the SEC obviously follow GAAP and therefore they account with regards to the accrual method. I'm currently dealing with a company who is a subsidiary of a publicly traded company and they are telling me they need a payment before EOY since they are on a cash accounting method. If the parent company has AR/AP in their statements then why would a subsidiary account via cash method?
Also, maybe a Q for all of you FIG coverage area people, wouldn't it be beneficial for banks to file under the cash method? Then they would be able to defer the fee income to the tail end of the loan, right?
I know these two questions seem unrelated but the company I am dealing with ties these both together. Trying to get an understanding of if the company actually accounts via cash and, if I can't figure that out, maybe I can get some arguments for and against a cash method of accounting for them to determine whether their assertion is valid.
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